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DTH News : Will Tata Sky and Airtel Digital TV merge?
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[Image: QwkWRpO.jpg]MUMBAI: After the merger pact between Dish TV and Videocon d2h, it is the turn of Tata Sky and Airtel Digital TV to explore the possibility of a deal.

The two direct-to-home (DTH) companies are in exploratory talks for a merger. This is part of a broader discussion between the Tata Group and Bharti Enterprises to evaluate an alliance that would also involve their telecom, overseas cable and enterprise services.

While there is a need for the Indian telecom market to consolidate in the wake of an aggressive pricing strategy rolled out by Reliance Jio, the DTH sector also needs to narrow down the number of players to offer better scope for profitability.

Dish TV and Videocon d2h are merging their assets to create the largest DTH company in India and the second-largest in the world by subscribers. While Dish TV ended FY17 with 15.3 million net subscribers, the DTH arm of Videocon Group had a base of 12.91 million. The combined strength of the merged entity would thus be a whopping size of over 28.31 million subscribers.

If Tata Sky and Airtel Digital TV decide to merge, it will further narrow down the private DTH operators from six to four. Sun Direct and Reliance Digital TV also could combine, thus reducing the DTH players to three.

TelevisionPost.com had earlier reported that though there is no immediate compulsion for DTH players to align just because Dish TV and Videocon d2h are merging, the possibility of deal-making in the future cannot be ruled out. With the benchmark of a DTH company’s size being defined by Dish TV and Videocon d2h, biggies like Tata Sky and Airtel Digital TV would want to scale up while Sun Direct could position itself as a mid-tier DTH company.

According to a report in The Economic Times, discussions between the Tata Group and Bharti Enterprises have revolved around a possible merger between unlisted Tata Teleservices and Tata Sky and the listed Tata Communications with the Sunil Mittal-owned Bharti Airtel, which includes its wholly owned DTH arm.

Outlining such broader deals in other markets, ET has quoted Tony Worthington, senior adviser at UK-based independent research firm CCS Insight, as saying, “This so-called “multi-play” deal, involving mobile, landline, broadband, and TV is increasingly common in markets in the Americas, Europe and Asia – AT&T-Time Warner in the US, BT-EE in the UK, Vodafone-Liberty Media in the Netherlands. India is probably ready for such a transaction and there is no doubt that it would be ground-breaking.”

TelevisionPost.com feels that the ‘multi-play’ deal is ideal in case of a telecom operator and a cable TV network. The case is not so strong in case of a DTH player. Time Warner and Liberty have cable networks and are offering broadband and TV. So combining with telecom companies is natural as it expands their existing businesses.

There is, however, a case for the Tata Group and Bharti Enterprises to work out a broader deal. But this is not because telecom and DTH companies need to combine. The need springs from the fact that the two sectors need to bring down the number of players operating in these businesses. Like telecom, DTH needs a consolidation wave. The common thread is that the Tatas and Bharti have a presence in both telecom and DTH.

The deal needs to be worked out separately. In case of telecom, working out a deal is possibly more simpler. The Tatas are very keen to cut down their losses from the telecom business. Besides, Idea and Vodafone have combined and so are Reliance Communications and Aircel.

The DTH deal would be a more complex exercise. Tata Sky is a joint venture between the Tata Group and Rupert Murdoch-controlled 21st Century Fox. Murdoch wants to increase stake in Tata Sky but is bogged down by a regulation that allows broadcast companies to own only 20% stake in a DTH company.

Star India, 21st Century Fox’s wholly owned India subsidiary, will not want to be part of the telecom venture. So the DTH deal has to be dealt with separately. The possibility could be that Star’s holding remains the same in the merged entity while Tata Group gets to dilute its stake.

In case Tata Sky and Airtel Digital TV decide to merge, they will be just behind Dish TV-Videocon d2h by number of subscribers but ahead in terms of revenue. Dish TV has a 25% share of net subscribers compared to Tata Sky’s 23%. Airtel Digital TV and Videocon d2h have a share of 20% each, as per TRAI data until 31 December 2016.

The total active subscriber base of the six private DTH operators grew 12% in the calendar year 2016 to 62.65 million from 55.98 million in the previous year.

“The DTH industry in India is in the midst of a consolidation wave. The dynamics of the business needs to change,” said a media analyst.

Source:

___________________________________________
Airtel Digital HD Recorder / Kerala Vision Digital TV
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Thanks given by: anil yadav
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